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US tax reform to hand Abcam extra millions

The controversial tax reform in the United States is set to hand a multi-million pound windfall to Cambridge UK life science company Abcam. The bonus payback was revealed in a half-year trading update by the business today.

CEO Alan Hirzel said that as a result of the US Tax Cuts and Jobs Act agreed in December Abcam would be a significant beneficiary with lower tax rates and a one-off exceptional payment.

The trading update revealed: “Whilst the full implications of this new legislation are still being reviewed, we anticipate that, as a whole, the Act will reduce our group effective tax rate by low single digit percentage points from FY18/19.

“It is also expected that the Act will result in a one-off, exceptional non-cash tax credit in our current financial year of between £6 million and £7m relating to the restatement of certain deferred tax assets and liabilities.

“We will continue assessing the full impact of the Act and expect to provide a further update at our half year results, along with a fuller update on the company’s progress.”

The bullish trading update ahead of its results for the six months ended December 31 also revealed that Abcam continues to deliver double-digit revenue growth – twice underlying market rates.

Hirzel said: “Overall, we expect to report revenue growth for the first half of approximately 11 per cent on a constant currency basis and approximately 10 per cent on a reported basis. We remain on track to deliver against our constant currency revenue growth target of around 10 per cent for the full year.

“Catalogue revenue grew by over 11 per cent in the first half of the year, with all product categories growing ahead of estimated underlying market growth rates. Custom products and licensing revenue, which represented over six per cent of the total for the period, increased by approximately eight per cent.”

China has become a boom market for the company, which is in the process of moving to a new flagship Cambridge HQ. Hirzel said: “Our business in China continues to operate well and we expect revenue growth of over 24 per cent in the first half, ahead of the market growth rate in the territory.

“It has been another period of good progress for Abcam, as we have delivered on our financial goals and expect to report total constant currency revenue growth of approximately 11 per cent.

“Our focus remains on better serving researchers to achieve their mission faster. We are committed to further develop our product portfolio and continue to enhance our organisational capabilities to support our ambition of becoming the most influential life sciences company for research communities globally.”

The company will report its interim results on March 5. Hirzel will be presenting at the 36th Annual JP Morgan Healthcare Conference on January 10 in San Francisco.